Building Businesses: A Calling

Today, our guest is Greg Skoda. Greg is co-founder of not one, but two top 100 accounting firms, including Skoda Minotti, which is a Cleveland area-based firm, which he recently merged in with Marcum, which is a New York headquartered firm. Skoda Minotti was a top 100 firm, and Marcum is a top 20 firm in the country. But not only did they do that, Greg co-founded the public company CBIZ in 1996, and over a two year—which I’m assuming was exhausting—period, he researched more than 2,000 companies and completed over 135 acquisitions, creating a firm of over 5,500 employees. Greg, welcome to The Unique CPA.

Thanks, Randy—look forward to talking with you today.

I’m thrilled to have you. You and I met a handful of years ago through both of our affiliations with LEA—Leading Edge Alliance and Association of CPA Firms. And I’ve always been intrigued with your story, so I’m thrilled to have the opportunity to discuss this with you today.

The first question I have, or the first thing I’d really like to get into is—well, obviously, you know, you’ve had this knack of building fairly large firms, but one of the most unique situations I’ve ever heard of is CBIZ and how you went about that. So let me set the stage, and you can correct me if I’m wrong, but prior to CBIZ—before 1996, you had already had a firm which was a very similar name to the I’m assuming—was Skoda, Minotti & Reeves?

Correct.

Yeah. And you somehow ran across some individuals that were looking to grow this public company, and you got involved, and just this whole two years timeframe of what you did is intriguing to me. So give me a little background on CBIZ and how this all came about.

Thanks, Randy, more than happy to. Sort of the beginning of the story, and I’ll do this quick, is I originally started our first firm in 1980, and I bought a small one and a half person firm from my father. It was a small write-up firm. And you know, with a vision of, “How do we help people build and grow businesses and oh, yeah, by the way, were accountants.” The debt business model took off for us, and what we did throughout the 80s, we were we were listed in a number of national publications at the time as one of the most distinguished firms in the country for what we were doing.

The other thing we did, which is pivotable to our future was along with a group of clients—It was a tough insurance market in in the mid- to late-80s. And we ended up starting an insurance carrier alongside the CPA firm. And so we were building Skoda, Minotti & Reeves, and we ended up building an insurance carrier which became a group of insurance carriers by the name of Century Surety.

By 1990, we had thought we had grown in the insurance business enough to take it public. And I was a minority shareholder in that in that group of companies, and one thing led to another and we came to the conclusion that we weren’t big enough to take it public—but we were big enough to be public, and the way to get there was a reverse merger. So we looked around and we found a small public company we’d actually written some bonds for by the name of Republic Waste, and Republic Waste in 1989, did like $20 or $30 million in revenue, they were a NASDAQ-listed company, and they really weren’t going anywhere at the time.

We cut a deal to merge the insurance business into  the public company, only to find out the day before we were supposed to close that transaction, that a gentleman by the name of Mike DeGroote, who Mike was the founder of Laidlaw, and the co-founder of Blockbuster Video, had bought control of Republic. He had sold his interest in late a year earlier for $2 or $3 billion, and he was looking to get back into the game. He told us he didn’t want anything to do with an insurance company and we weren’t working to close the transaction we were supposed to close tomorrow, and everybody sued everybody for three years.

We continued to run the insurance business we continued to run the accounting firm, grow the accounting firm, and 1995, 96 comes along, and DeGroote has grown Republic to like a $5 billion company doing acquisitions. And in Mike’s career, Mike did somewhere in building Laidlaw ad Republic, somewhere between 800 and 1,000 acquisitions.

Wow.

They sold their interest—he and his partner—in Blockbuster Video, Wayne Huizenga—sold their interest in Blockbuster Video for like three quarters of a billion dollars, and the timing was right. Wayne joined Mike and Republic with the notion of they were going to go build—Mike had build out a waste business to put the business that people know is Republic Waste, and he owned a mortgage company, he owned ADT Security, and a variety of other things inside that business.

And the notion was they were gonna get into the used car superstore business. And they bought a small platform that they could build from. And they tried their hand at that for a cup of coffee, ended up deciding they wanted to get into the new car business. And at the time, there was no such thing as corporate owned dealers in the United States. They were pretty much family owned. And they went to General Motors, and to make a very long story short, ended up buying National Car Rental, put it in Republic, they were a big customer of GM’s.

And Jim said, “Well, you know, they eventually allowed them to have corporate-owned dealers,” and Auto Nation was born inside Republic. And when they did that, Mike and Wayne decided they’d kill each other if they stayed existing inside the same company. So Mike wanted, the way he viewed startups, he wanted to start something else. So they dividended out a small public shell, not dissimilar than the original waste business we wanted to buy. So it had the same shareholder base, the same analytical following, didn’t really have much of a business in it.

And we ended up merging our insurance business—the one that we sued each other over five years earlier into the public company. We announced that transaction in May of 96. And it took us until October of 96, to get through the FCC and everything we had to get done, and to close that transaction. When we closed that transaction, Mike had asked me to come in and be CFO of the public company. And I said, “I really don’t want to do that,” and he said, “Why? What do you have so much better than this? We’ll show you how to make a bunch of money.” And I said, “Well, I’ve been working on this model for 16 years, and it’s really, how do we help people build and grow businesses? At its core, we’re an accounting firm, but we’re in a variety of other businesses that are all targeted to, how do we help people build and grow their business.”

And we left that meeting, he said, “I don’t want anything to do with that—I don’t want to do it with an accounting firm.” I said “You don’t really get it. It’s not about an accounting firm. It’s about, how do you help people build and grow their business? And it’s value added services, and by the way, yes, we do financial statements, we do tax returns. And we’d like to think we do them as well as anybody on the planet.”

So we left that meeting sort of unagreed, and he called me a couple weeks later and said, “You know, we did some research, we think you might be right, you might be able to do this.” And so we cut a business deal to really become the first CPA firm that ever figured out a way to get public, and access to capital markets in that way. And I said, “But there’s one detail,” and he said, “What’s that?” And I said, “In order to own an accounting firm right now, for the most part, you need to be a CPA, and I need to change those rules, if we’re going to make this work.” And he said, “How are you going to do that?” And I said, “I have an idea.”

We spent a fortune with lawyers—we worked with the AICPA, the SEC, the attorney general’s office, and we got a no action letter signed off on, they’d let us go, nobody would bother us, and we’d go and build our business model.

And so the the other complication was at the time—and still—accounting is a state-regulated industry. And so in order to get to non-CPA ownership, we had to go state-by-state to the accountancy boards, which was a blast, and we were the case of first impression. And around that time, American Express tried to get into it a little bit and H&R Block started getting into a little bit and, and we were pretty much the first the first company in every state that we tried to get into, and it was 47 states when we were done in that two year period of time.

Greg worked with the AICPA, SEC and numerous attorneys to obtain regulatory clearance for his plans for CBIZ.

And we got licensed—we ended up getting, you know, getting permission to go ahead and do what we wanted to do, and we ended up getting licensed in 40-some states as we walked around, and we actually hired somebody out of the attorney general’s office in in Ohio to run around all the other states because they’re all his friends, and help us make that possible.

And so we had to do that on a state by state basis. So we started the public company essentially in December of ’96. And the mission was, first we were going to sell off the small little waste business that was in it. We eventually renamed the company which was originally named international Alliance Services to Century Business Services with a ticker symbol of CBIZ. And we started down a path, and we started buying accounting firms, insurance agencies, predominantly, and then we layered in some other things along the way. When you partner with a couple of multi billionaires who have made their way in the world by way of acquisition, and, you know, between them, thousands of acquisitions, and sort of the force feeding. We used to talk about it, like, you know, “This is like drinking martinis through a firehose.”

But if you came in with a 24/7/365 adventure, of building a team and making things happen—on the team that we built, eventually, we looked at a couple thousand firms, and we ended up doing due diligence on eight hundred some firms. We bought 135 firms in two years—the two years I was running the company—and we built it from really the firm we started with, we started with its 70 employees, and two years later, we have 5,500 employees, and 240-some offices, in 40-some states, and we’d taken a company from essentially almost no market cap, public company up to a low $2 billion market cap. And it was a wild ride. Just a wild ride.

Oh I can’t even imagine! I mean, were you ever home or were you ever sleeping in that period?

Not a lot. In fact, what sort of got to me near the end of my tenure there was, one of my young children at the time, looked at my wife and asked the question, “Mom, where does Daddy live?”

Oh!

And he thought about, if I was ever in town, I’d get home after dinner, and I’d leave before school. And, you know, I might see him for a day and a weekend, and it was like, it was crazy, for two years. And I needed to end it after that, after a couple years of what we did.

Yeah, that I can understand. And so a couple things I want to point out about what you just shared there—which is amazing—I’m like, you know, listening to this, I’m just thinking, I’m just entranced in what you’re saying, and I’m thinking, “Wait, I gotta ask another question down the road here! I gotta be prepared! This is just unbelievable.” So first public CPA firm. Has there been others?—I don’t even know this—since then. Or are they the only public firm?

Not of any scale. There’s been a couple things that have been tried, there have been a number of folks that tried to do it and for one reason or another couldn’t get there. And then there’s some small ancillary things. but not in the same way. H&R Block was in the business—

Right. I remember that.

—for a while. And so that would have been probably the closest to what we did. American Express was in the business for a cup of coffee.

Yep.

That would have been similar to what we were doing. As far as I know, American Express is out of that business and H&R Xlock is out of that business. And, you know, CBIZ was sort of the the one that stood the test of time.

And American Express—what did they, didn’t somebody do something with a fairly large firm, or am I misremembering that?

No, they did not. The large firm was H&R Block.

Okay.

H&R Block, they picked up McGladrey.

That’s what I was thinking.

They were like a $250 or $300 million firm, and they were the underpinning of what H&R Block was doing.

Yep, yep. And now they separated that now, right? That’s what I thought.

Actually and eventually H&R Block acquired what American Express did, so American Express acquired a number of firms and they eventually had a transaction, and they moved inside H&R Block.

Oh they did. Okay. Is that still the case, then?

No, they then separated.

Alright. And then the other thing that I got out of that? Well, two other things: I’ve been in public accounting quite a long time, you know. I sold my practice—or merged my practice in with another firm in ’06, before we started Tri-Merit, you know, so I stay in tax now. But I was always the, you know, “You had to be a CPA to have ownership of a CPA firm.” And then, you know, now, I mean, I’ve talked to, you know, a handful of managing partners on the show, even of top 100 firms, that aren’t CPAs. And I always wondered where that came from—that came from you. You created this ability for non-CPAs to be part of public accounting. That’s amazing.

Well, I think the the business has evolved a lot. Certainly, certainly, I’m a CPA, and it’s still am today, and do practice with some clients again. I mean, that’s sort of the fun part for me. But these firms turn into businesses, and they turn into multifaceted businesses. So you know, we have partners and we have partners and firms all over the country now that have different specialties. I mean, some of them might be technology, some of them might be marketing, some of them might be staffing, some of them might be, you know, a whole range of businesses—and, you know, they own pieces, parts of this business, and, you know, certainly CPAs don’t have the franchise on running business as well. I mean, there’s a lot of other folks that that have skill sets that really lended to

No! That’s not right. Alright, maybe there is. But that’s the other thing, then, that I got out of that story is that, you know, we used to be in my mind, “Tax and Accounting”. And now we’re advisory firms, and that, again, in my mind came out of what you did to growing this. It wasn’t just tax, it wasn’t just accounting—you had insurance, you probably had payroll, you probably had other services that went in as well. And every firm out there, at least of any size, is doing that now. I’m giving you credit for that as well. I mean, it obviously was—there was probably some of that going on, but then never to the scale that you did, correct?

Yeah, I think at the time, certainly we were the first group that did it at scale.

Mmm hmm.

And took a lot of criticism early on for doing that.

Oh, I’m sure!

If you went back and pulled the Accounting Todays, and whatever, I mean, there were fans, and there were not fans of what we were doing. So yes, we did have payroll, yes, we did have marketing, yes, we did have staffing, yes, we did have wealth management. I mean, we added a wide range of things, and frankly, it was born out of, those were the things we were talking to our clients about. And if we were talking to our clients about it, we wanted to control the quality, we wanted to control the deliverable. And you don’t have to think about it really long—you make the life insurance referral to XYZ Insurance Agency, and you know, that person makes a $20,000, $50,000, $70,000 commission, and you get paid for an hour.

Yeah. Right.

That didn’t seem to work—that didn’t work well with us. And so the more of those things that we could bring in and control the quality of the deliverable and and have a shared economic interest in, seem to be better.

Now we’ve got all kinds of independence rules, and things that we had to sort of architect our way around. And firms still do in ways that they deem appropriate. But, you know, getting to a place where you could really add as much value as possible to our clients was always the key.

All right, so that that’s just unbelievable, just the whole history, I’m finding out all the history that I know of accounting, and how we’ve gotten to where we are today in this conversation. So I’m just thrilled with this.

But I’d be remiss, I mean, I could, you know, cut this conversation now—which I don’t ever want to end this conversation—but I’d be remiss if we don’t go into what then happened after. Because after two years, it sounds like there’s about two years, you know, burnout is probably a good word to use. Sounds like you took a little time off. But then the building / acquisition itch, you know, back into public accounting seems to have come back. So what happened after that, after you left CBIZ?

We spent a couple years working on some private equity things that we had, and I got in the best shape of my life—exercised a lot more. And in late 2000, the guys that were running a public company called and asked if if I wanted to come back and I said, “No, I really didn’t.” And they said, “Well, we want to get we want to get out of the insurance carrier business, and would you guys have an interest?” And again, I was a minority shareholder in that carrier side. And so talked to our regional partners. And the original group had an interest. And so we purchased the insurance carriers that we added into the company in late 2000.

And when we did that, and I’ll just—so I can run that story out—that group, we ended up, there were three carriers, we cleaned them up, took the largest one public again in ’04. I did not have a role in the public company part of the ownership group. But the, you know, the team grew it till ’08 and we sold it in ’08, the largest of the carriers. And then we kept two that we ran a second one and we sold it about five or six years ago, and then there’s a third one we own today and in a variety of different products.

But it begs to sort of go backwards. Then after we bought the insurance carriers back out, some of my accounting partners came to me from the original firm—from the original Skoda Minotti firm—and said, “Hey, if you’re not going to come back, we’d like to start something else.” And I went and made peace with the guys that were running the public company and I took about 15 guys out of the original firm, from my original firm, and started. You know, originally I wasn’t going to get involved in sort of the day to day, we ended up picking a name and put the name in this market—in Ohio, Skoda Minotti meant something. Reeve’s semi-retired and moved to Florida.

And so we started the firm Skoda Minotti, and then it sort of like had my name in it so I had to make it work. But I said I didn’t want to travel seven days a week again, and I wasn’t really interested in building a national firm at that point in time in my life. My kids were still younger, and I wasn’t going to be gone again. And so we set out to sort of build it a brick at a time, frankly, more of a lifestyle business in the beginning. And then as time went on, as my kids got older, you know, we do a small acquisition here, a small acquisition here, sort of really built out not only the accounting firm, but you know, really live sort of true to ourselves, how do we help you build and grow your business? So we got into the technology business, we got into the marketing business, we got into staffing business, we got into the wealth management business. And so we started to build all those things around. Fast forward to really, a couple of years ago, and I had met Jeff Wiener—who is the CEO at Marcum, and really the the architect and builder there—and in the early 90s, we tried to buy Marcum when we were doing CBIZ.

That didn’t come together—wasn’t the right time or place. We ended up in the same association, by happenstance, as Leading Edge. And Leading Edge, you know, really sort of reintroduced us, and we had some conversations for a couple years, and we started our partner group in Skoda Minotti, started talking about life, and where we were and what did we want the next five or ten years to look like.

So we had grown the business to about 16 million in revenue across all our businesses, and we said, you know, we can spend the next 10 years the next block of years, and go from 16 million to 600 million. I said “I already did that once, and I don’t want to do that again, and I’m not going to be gone for that.” I said, “So I’ve really got a couple of choices: We keep building it like this, or, there’s probably one firm out there that that thinks like we think a little bit, and is entrepreneurial, and wants to grow and wants to make things happen, that I’d have an interest in. And the interest that I have in it would be, you know, if we were to put this together, everybody’s got to be on the same page, and we’ve got to go down this path.”

So we spent the better part of probably a year, year and a half, looking at, did it make sense to merge our firm into Marcum, and essentially be that $600 million firm again, and grow from there, where I left off 20 years ago.

Yeah. Right.

And, you know, one thing led to another and we involved a number of layers on our staff—I mean, our managers and our senior managers have met some people from Marcum, principals met people, our partners met people, and we sort of poked around at this, and we eventually put a transaction together in December of a little bit more than a year ago.

And so, you know 2020 was the first full year. I mean, so that was like 13 months of a combined firm. And for the folks we have that want to be part of something bigger, and want to build from here, it’s been a phenomenal platform. Did we have some folks that wanted to stick, wanted to be in a small firm, and thought that we were too big at 300 people? Yeah, we probably did, and some of those people left. But to be honest, you know, everybody who wants to grow and wants to grow aggressively, wants to take advantage of sort of the platform of a national firm / international firm—it’s been great. In Marcum, we’re down to about 2,500, 2,700 people these days.

I mean, billing rates are probably double what they were when I was building the firm in the first place. So you don’t need 5,500 to do what we did back then, now. With the technology, it’s a little bit different. And so, you know, you can do it with 2,500, 2,700 people, so it’s about half the number of people that we had.

We’ve got, in Marcum, we’ve got more large offices, whereas in CBIZ, we had a lot of small offices, which eventually got consolidated, a lot of them, as CBIZ built itself out over time.

Yep.

And so today, I’m spending my time, probably about almost half of it, with clients, which I love to do, and I didn’t get to do when we did the CBIZ thing. I love to help people build and grow businesses. And the other half of my time would be sort of on firm affairs and firm matters and sort of, how do we build and grow the whole thing.

And, you know, working with working with Jeff’s been, you know, it’s been great. You know, we sort of, we talk to each other, there’s sort of two guys alive that built $600 million firms in the industry, right? It’s he and I. And so it’s sort of fun being to be able to go back and forth and talk about life, and, you know, I told him, you know, as we got together, “One of the one of the best things about this for both of us is, I don’t want his job.” So it’s Jeff’s show and he’s running and building it, and I’ll help him for a while. And we’ll go from there.

Well, I don’t know if this is a fair question or not, but how long is that “while”? Do you have a plan?

I don’t have any idea. I mean, I have no predisposition. You know, as long as I’m at once I’m having fun, we’ll keep doing it.

Fun’s the key, yep.

And we’re doing some of the same things. I mean, we’re not only building the accounting firm—outside of the accounting firm, sort of next to it, I mean, we have, there’s Marcum Wealth. And that’s really the platform for Marcum, and really was what we were doing. Marcum really hadn’t focused on the wealth business, and Skoda Minotti had much more. So the leadership team we had in what was Orem Wealth underneath us, is really the leadership team in Marcum Wealth, so we’re building that business out, as well as sort of part of what we’re doing. It’s a great platform for us.

Nice. Well, it sounds like you’ve got that passion for building and growing, and so that sounds like a great thing to do.

I’ve got about a thousand other questions, but we’re going to have to stop today. So I appreciate your time. One thing I’m going to brag about is, I got to sit at a table with you and Jeff, I think it was last January in Vegas at a conference. So I can say I sat at a table with the two people who built a $600 million firm. So at least I’ve got that going for me.

So this was awesome. Believe me, we could go on forever. Before we go, there’ll be one final question, but before any of that, any final thoughts on that? I think we covered a lot. 

I think most of us on the podcast who are CPAs, and this is a great business. I mean, it’s a great industry, you can build it into whatever you want to build it into. It’s something that, you know, we’re fortunate enough to wake up every day excited to get out and make things happen. And it’s, you know, I really feel blessed in many ways that we sort of found the industry and, you know, we’ve got a lot of great people in it, and the sky’s the limit.

Yep. And you mentioned it you can go wherever you want with this industry, and honestly, part of that’s because of what you built with CBIZ, from what I’m hearing. Because you know, we were not as diversified prior to that.

So thanks for that. I warned you ahead of time that we do a final fun fact about our guest. I think we found out about twenty fun facts already, but I know water skiing is a big passion of yours. You want to give us a little background on that?

I mean, I didn’t pick it up till late in life. I picked it up in my early-to-mid 30s, and if anybody asked me what I would rather be doing at the moment, I’d rather be slalom water skiing. And so there’s a group of folks that I ski with, and we have a blast and love every minute of it, and certainly family’s most important. And so you asked me about my kids, and we can talk for days.

In spite of all he’s accomplished in business, Greg would rather be water skiing.

No, I’m sure.

But you asked me what I want to do right now, and I’d rather be water skiing.

So let me ask you this. I mean, in the Cleveland area, sure. you got some nice summer weather for skiing. Are you going somewhere else in the winter to ski or what’s the plan there?

No. I mean, we ski, I ski, as much as I can. And sort of, our ski season is sometime in May to sometime in September. And I try and get on the water, and we’re early morning skiers so we’re out at sticks on the lake we ski and we have a blast.

Yeah, it’s fun. I mentioned you before we started I started waterskiing when I was six years old, and been doing it forever, but I’m sure not to the level that that you are. The legs aren’t quite holding up like they used to, so I’m not sure how much water skiing is left in my life.

So before we wrap up, then, obviously people are gonna want to know more about Greg and what you’ve done. I’m sure you know, they can look at a website, LinkedIn—any ways people can get ahold of you or see what’s going on with you?

Yeah, absolutely. I mean, yeah, I’m an avid user of LinkedIn. And the so you know, certainly reach out to me on LinkedIn, you know, all my contact information’s on LinkedIn or on our website. If people want to reach out, I’m happy to talk to folks around the country.

Well, great—from being a public accounting “fan” like I am, this was great for me. Hopefully everybody else enjoyed listening too. I want to thank Greg for being here. And I want to thank everybody for joining us today. And you can find all the links and show notes for today’s episode as well as more about Tri-Merit at TheUniqueCPA.com. Remember to subscribe and join us for our next episode where we’ll be going beyond compliance into forging new pathways of delivering value to clients diversifying your revenue streams and leading edge management techniques and styles.